Enabling Exports to Benefit Business

A biogas opportunity at a shuttered Brazilian landfill reveals U.S. Ex-Im Bank’s potential, and how U.S. equipment providers can expand into the global marketplace.

By Erin Voegele | August 22, 2012

One of the world’s largest solid-waste landfills is located on the outskirts of Rio de Janeiro. The Jardim Gramacho landfill, a 140-acre site, received approximately 7,000 tons of garbage per day before the Brazilian government took action to close it in June, just weeks before the country hosted the Rio+20 United Nations Conference on Sustainable Development. The downtime of the site will be short-lived, however. After nearly 35 years of operation as a solid-waste landfill, the site has attracted a new international collaboration of Brazilian developers and U.S.-based equipment suppliers. The new leadership team, with some help from the Export-Import Bank of the United States, has a new vision: biogas production.

Brazilian developer Gás Verde S.A. will own and operate the plant, now referred to as the Novo Gramacho biogas project. The project will feature technology and equipment supplied by California-based FirmGreen Inc. The Export-Import Bank of the United States has supplied Gás Verde with a 12-year, $48.6 million loan to help finance the project.

The revamped facility will convert raw methane produced in the landfill into clean, usable biogas. Once complete, FirmGreen says the project will capture and treat 20,000 normal cubic meters per hour (nM3/hr) of landfill gas, resulting in 9,000 nM3/hr of fuel-grade, biobased methane. The resulting gas will be transferred via pipeline to a refinery owned by Brazil’s national oil and gas company, Petrobras S.A.

In addition to reducing passive landfill emissions, the biogas project will allow the Petrobras refinery to replace approximately 10 percent of the fossil-based natural gas it consumes with the fuel-grade biogas produced at the Novo Gramacho site. The project is estimated to reduce greenhouse gas emissions by 1.4 million metric tons per year.

According to FirmGreen CEO Steve Wilburn, his company has been working with Gás Verde for three years to develop the project. The biogas plant is scheduled to be operational during the second half of this year, most likely in late fall, he adds.

FirmGreen’s Contributions

FirmGreen has been working in the biogas space since 2004, when the company acquired patents and proprietary technology related to biogas production. The company has also developed several of its own patents over time, Wilburn says.

FirmGreen has developed several biogas demonstration projects, one of which received a U.S. EPA Project of the Year award in 2009, as well as awards from the U.S. DOE and the Solid Waste Association of North America. The company has since scaled up to commercial-scale applications. The contract for the Novo Gramacho project was announced in May 2010. According to Wilburn, Gás Verde completed extensive vetting of FirmGreen’s technology prior to finalizing the agreement. “They followed us very closely and we shared our data results from [our demonstration] projects in the U.S.,” Wilburn says. Despite steep competition from other biogas developers, FirmGreen’s technology won out. Wilburn attributes his company’s selection to the fact that FirmGreen’s technology is reliable, robust and capable of producing a biobased drop-in replacement for fossil-based natural gas.

FirmGreen’s proprietary biogas cleaning equipment is one of the company’s technologies being installed as part of the Novo Gramacho project. According to Wilburn, the project will include a cleaning technique that uses CO2 to purify raw biogas. “In our process, we use a CO2 wash, where we take the carbon dioxide and partially liquefy it in a column,” he says. “The CO2 washes down the column by gravity flow and, meets the uprising [raw biogas], and washes contaminants out, leaving a very pure stream of methane, the balance of CO2, nitrogen and oxygen—all with the volatile organic compounds removed.”

When compared to pressure swing adsorption (PSA) techniques for gas purification, Wilburn says a primary benefit of FirmGreen’s process is that it doesn’t produce waste absorbent material that needs to be disposed of in a hazardous waste landfill. “We don’t have to do that,” he says. “We are a closed loop system. Within the United States [we generally don’t] require EPA permits from an air quality standpoint, because we meet or exceed all of the EPA standards.”

Wilburn also notes the carbon dioxide wash technique is most appropriate for projects that aim to produce high-quality biogas fuels, such as those used in transportation or refining applications. “We also use PSA if a high-quality fuel is not required,” he continues. For example, PSA technology would sufficiently purify biogas to a quality appropriate for use in some electrical generation and fuel cell applications.

The Nova Gramacho project will also feature FirmGreen’s patented VerdeControls operating software. The package was designed to control large manufacturing facilities, such as automotive assembly line operations, Wilburn says. With the software, FirmGreen is able to control every motor, device, valve or other piece of equipment found at a project site. The software can also generate management reports and maintenance logs, implement inventory control activities, and perform a wide range of other tasks. When installed at electrical generation sites, it is also designed to work with utility software for the smart grid. While the VerdeControls system might not be appropriate for smaller biogas applications, the software will be an important component of the Nova Gramacho project. The package will allow Gás Verde to remote monitor the plant and produce sophisticated management reports that will help manage costs to keep the operation economical. It will also integrate and control plant operations, including onsite power production.

Once fully operational, the equipment will capture 90 percent of the raw methane that normally goes to the landfill flare. “In the case of CO2, only 12 percent would go to the existing flare, so we are sequestering the balance of that in the form of liquid CO2,” Wilburn says. That component of the project is expected to be operational next spring.

Gás Verde intends to generate carbon credits with the sequestered carbon dioxide. “It is also possible that carbon dioxide could be used to create energy value in the future,” Wilburn says. FirmGreen is developing a patented process to use liquid carbon dioxide as a media to cool data centers, which are extremely energy intensive operations, he continues.

The Nova Gramacho biogas site will also feature other renewable energy production methods, including 2 MW of solar power generation. In addition, power generation equipment will take a portion of the tail gas that would normally be flared, for use to produce electricity. Together, the two electrical generation techniques are expected to produce 7 MW of energy, which will be used to offset the load of the biogas plant.

Multi-nation Economic Development

To complete the project, FirmGreen is working with nearly 70 U.S. subcontractors. Overall, the company estimates the project has generated 165 direct jobs and supported the continuance of numerous other positions. The Novo Gramacho biogas project was a good fit for Ex-Im Bank's financing because the strong job creation is in accord with the bank's mission to support employment in the United States.

The bank is an agency of the U.S. government that was established in 1934 to finance export sales of U.S. goods and services, says Craig O’Connor, director of Ex-Im Bank’s office of renewable energy and environmental exports. O’Connor’s office was established in 2008 to increase support for environmentally beneficial exports. Obviously, that includes renewable energy, he says. Ex-Im Bank's financing is provided in accord with the arrangement on official export credit of the Organization for Economic Cooperation and Development, which includes biogas as a renewable-energy source.

The Ex-Im Bank provides direct loans and loan guarantees to creditworthy foreign buyers for the purchase of U.S. goods, technology, equipment or services. The Bank also provides export credit insurance that enables U.S. exporters to offer financing to their international customers, and provides working capital guarantees to support the working capital needs of U.S. exporters. According to O’Connor, the bank is able to offer loan guarantees in either U.S. dollars or foreign currencies. “In terms of our environmental exports enhancement, we are able to offer the maximum allowable OECD terms of up to 18 years for renewable energy,” he says. “We are able to support local costs—in-country costs—of up to 30 percent of the U.S. export contract. We are also able to capitalize the interest during construction.”

“Our mission isn’t to make a profit,” O’Connor says. “But, we do look for a reasonable assurance of repayment.” In the case of the Nova Gramacho project, the Ex-Im Bank awarded Gás Verde with fixed rate U.S. dollar financing. “They decided to go with a direct loan,” O’Connor continues, that features a fixed interest rate of 2.21 percent and a 12-year repayment period. “We also charge a one time, flat, country-exposure fee that can be financed as part of the loan package,” he says. “The all-in cost was very attractive, and that enabled this project to really reach commercial viability.”

O’Connor notes that renewable energy projects are capital intensive and generally require longer repayment term loans at attractive interest rates to be economically viable. “We’re not here to compete with the private sector, but really to supplement the private sector and provide long-term lending where private sector lending might not be available,” O’Connor stresses. The hope is that private sector lenders might be more willing to take on these types of projects once they see success with Ex-Im Bank financing, he adds.

The bank also brings private sector lending into a project. According to O’Connor, loan guarantees are an effective way to do this. “The Ex-Im Bank can provide loan guarantees that represent the full faith and credit of the U.S. government for loans that commercial banks would make to finance these projects,” he says. “That means that [commercial banks] can basically preserve their capital. It enables them to offer longer terms at lower rates than they otherwise would.”

O’Connor describes the Ex-Im Bank as one of the best-kept secrets in international renewable energy project financing. “I think there is no question that with the Ex-Im Bank, foreign customers will get the most cost-effective source of financing for U.S. business services in the world, period,” he says. As a result of the banks direct loan and loan guarantee products, more foreign project developers should find it feasible to employ U.S. technology and equipment providers.

O’Connor adds that the Ex-Im Bank’s programs essentially support the creation and continuance of high-wage, high-skilled jobs in the U.S. “[The loans and loan guarantees] have a direct and tangible benefit to U.S. employment and U.S. competitiveness,” he says. The Novo Gramacho biogas project is a clear example of the sentiment O’Connor holds for the Ex-Im Bank’s ability, and for equipment providers and project developers based in the U.S. hoping to find their own version of the Jardim Gramacho landfill biogas project.

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